FindItMore | As a Personal Loan is collateral-free, banks and NBFCs require customers to have a credit score of 750 or above. Such a credit or CIBIL score certifies the credibility of an applicant and helps a lender determine his/her repayment capabilities.
One can easily avail Personal Loans with a CIBIL score of 750+ and use it in multiple ways. Whether it is for marriage, debt consolidation, education, medical expense, home renovation, or improving the credit score, Personal Loans can be used for all occasions.
Furthermore, banks and NBFCs offer competitive Personal Loan interest rates and also make availing it much more easier. They require customers to furnish minimal Personal Loan documents against which they can sanction such a loan within 24 hours.
Thus, sanctioning Personal Loans have become less complicated, and with a loan calculator, you can even calculate your EMIs beforehand. However, applying for these advances can cause a customer’s credit score to go down.
There can be two reasons for the credit score to decrease when individuals apply for Personal Loan:
Reason 1 – Multiple loan applications
Whenever a customer approaches a bank or NBFC for Personal Loans, the latter will inquire about the credit report of the former.
The credit report contains the credit history of a customer from various lenders. The report shows the credit repayment history of the customer in addition to his/her personal information, contact details, employment history, and others.
When a lender makes an inquiry of a customer’s credit report, the CIBIL score goes down. With multiple loan applications, the credit score will go down drastically.
Reason 2 – Applying for another loan after getting rejected
When a lender rejects a loan application, he/she will put a remark for the same in the customer’s credit report. Another lender, after seeing this remark, may also deny the loan application.
Getting rejected multiple times will inflict critical damage to the credit score. Hence, it’s better to choose other ways of improving the CIBIL score after facing a loan rejection. After improving it, one can apply for a Personal Loan again.
To avoid loan rejection without lowering the credit score, one needs to follow these 2 simple steps:
- Use a Personal Loan eligibility calculator
Many reputed banks and NBFCs provide an eligibility calculator to applicants. Using this, individuals can check whether they are eligible for a Personal Loan Online by providing their net salary, outstanding credit card debt, monthly loan EMIs, etc.
Few eligibility criteria that customers have to fulfil include –
- Have to be between the ages of 25 and 58 years.
- Employed with a public enterprise, private company or MNC.
- Have to be between the ages of 22 and 55 years.
- Need to have a business vintage of at least 3 years.
- Have to audit business turnover by a CA for the previous year.
- Need to file income tax return for the previous year.
Both of these individuals need to be residing citizens of India. Also, they need to furnish all relevant Personal Loan documents.
- Apply for an acceptable loan amount
If the loan amount is too high or too low, a customer may face rejection. The eligibility calculator can provide a loan amount which a customer is eligible to get. Adhering to that amount will enable one to get the loan approved and avoid denial.
By following these steps, you as a customer can ensure to increase your chances of getting a Personal Loan without lowering your credit score. You can also use a Personal Loan EMI calculator to compare this product from various lenders.